On Friday, February 21, 2014 at 9:30AM GMT the UK retail sales figures will be announced. The MoM figure is forecasted to be -1.0% with a previous of 2.6% while the YoY figure forecast is 5.0% with a previous of 5.3%. The below charts outline the historical information for each.
While MoM figures seem to have a much larger variation, YoY figures seem to provide a more stable trend. This is because MoM tracks the trend more closely as it compares sales to its previous month. YoY compares a month’s retail sales to the same month in the previous year and therefore gives us a longer timeframe which provides us a clearer picture. In our current situation we see YoY figures that are majorly positive. A long term trend such as this tells us that retail sales are growing.
While MoM figures may not tell us a lot about the long term trend, it is generally the more popular figure as it follows the trend more closely.
Historical numbers may provide us with a reasonable estimate for the long term trend and YoY figures but predicting MoM figures will require more analysis.
The consumer confidence chart indicates improving consumer sentiment, observing last month’s figure alongside last month’s MoM indicates a positive correlation. Improving consumer confidence would imply a factor that positively affects the MoM figure. Increasing disposable income leads to increasing spending which we can see in the last chart. Both these trends are also in line with the current consumer confidence trend.